Article 29.--KANSAS INSURANCE GUARANTY ASSOCIATION ACT
40-2906.Insolvency of insurer; duties of association; powers; certificateof contribution.(a) In the event of the determination of insolvency and order ofliquidation of a licensedinsurer after the effective date of this act, the association shall:
(1) Be obligated to the extent of the covered claims existing prior tothe determination of insolvency and arising within 30days afterthe determination of insolvency, or before the policy expiration date ifless than 30 days after the determination, or beforethe insuredreplaces the policy or causes its cancellation, if such insured does so within30 days of the determination, but such obligation shall includeonly thatamount of each covered claim which does not exceedthe first $300,000 of any claim,except that theassociation shall pay the full amount of any covered claim arising out of aworkmen's compensation policy. In no event shall the association beobligated to the policyholder or claimant in an amount in excess of theface amount of the policy from which the claim arises.
(2) Be deemed the insurer to the extent of its obligation on the coveredclaims and to such extent shall have all rights, duties and obligations ofthe insolvent insurer as if the insurer had not become insolvent.
(3) Assess insurers amounts necessary to pay the obligations of theassociation under subsection (1) subsequent to an insolvency, the expensesof handling covered claims subsequent to an insolvency, and the cost ofexaminations under K.S.A. 40-2911, and amendments thereto, and otherexpenses authorized by this act. The assessments of each member insurer shallbe inthe proportion that the net direct written premiums of the member insurerfor the preceding calendar year bears to the net direct written premiums ofall member insurers for the preceding calendar year. Each member insurershall be notified of the assessment not later than 30days beforeit is due. No member insurer may be assessed in any year an amount greaterthan 2% of that member insurer's net directwritten premiumsfor the preceding calendar year. If the maximum assessment, together withthe other assets of the association, does not provide in any one year anamount sufficient to make all necessary payments, the funds available shallbe prorated and the unpaid portion shall be paid as soon thereafter asfunds become available. The association may exempt or defer, in whole or inpart, the assessment of any member insurer, if the assessment would causethe member insurer's financial statement to reflect amounts of capital orsurplus less than the minimum amounts required for a certificate ofauthority by any jurisdiction in which the member insurer is authorized totransact insurance, or if the commissioner advises the association thatsuch assessment would in such commissioner's opinion, be detrimental tothe solvency of amember insurer. Each member insurer may set off against any assessment,authorized payments made on covered claims and expenses incurred in thepayment of such claims by the member insurer.
(4) Investigate claims brought against the association and adjust,compromise, settle and pay covered claims to the extent of theassociation's obligation and deny all other claims and may reviewsettlements, releases and judgments to which the insolvent insurer or itsinsureds were parties to determine the extent to which such settlements,releases and judgments may be properly contested.
(5) Notify such persons as the commissioner directs under K.S.A. 40-2908(b)(1), and amendments thereto.
(6) Handle claims through its employees or through one or more insurersor other persons designated as servicing facilities. Designation of aservicing facility is subject to the approval of the commissioner, but suchdesignation may be declined by a member insurer.
(7) Reimburse each servicing facility for obligations of the associationpaid by the facility and for expenses incurred by the facility whilehandling claims on behalf of the association and shall pay the otherexpenses of the association authorized by this act.
(b) The association may:
(1) Employ or retain such persons as arenecessary to handle claims and perform other duties of the association.
(2) Borrow funds necessary to effect the purposes of this act inaccordance with the plan of operation.
(3) Sue or be sued.
(4) Negotiate and become a party to such contracts as are necessary tocarry out the purposes of this act.
(5) Perform such other acts as are necessary or proper to effectuate thepurposes of this act.
(6) Refund to the member insurers in proportion to the contribution ofeach member insurer to the association that amount by which the assets ofthe association exceed the liabilities, if, at the end of any calendaryear, the board of directors finds that the assets of the associationexceed the liabilities of the association as estimated by the board ofdirectors for the coming year.
(c) The association shall issue to each insurer paying an assessment underthis act a certificate of contribution, in a form prescribed by thecommissioner, for the amount so paid. All outstanding certificates shall be ofequal dignity and priority without reference to amounts or dates of issue. Acertificate of contribution may be shown by the insurer in its financialstatement as an asset in such form and for such amount, if any, and periodof time as the commissioner may approve.
(d) Notwithstanding any other provisions of this act:
(1) A covered claim shall not include a claim filed with the associationafter the earlier of:
(A) Eighteen months after the date of the order of liquidation; or
(B) the final date set by the court for the filing of claims against theliquidator or receiver of an insolvent insurer.
(2) A covered claim shall not include any claim filed with the association ora liquidator for protection afforded under the insured's policy forincurred-but-not-reported losses.
(3) Any obligation of the association to defend an insured on a covered claimshall cease upon the association's:
(A) Payment, by settlement or on a judgment, of anamount equal to the lesser of the association's covered claim obligation limitor the applicable policy limit; or
(B) tender of such amount.
History: L. 1970, ch. 185, § 6; L. 1976, ch. 220, § 2;L. 2005, ch. 92, § 2; Apr. 14.
Article 29.--KANSAS INSURANCE GUARANTY ASSOCIATION ACT
40-2906.Insolvency of insurer; duties of association; powers; certificateof contribution.(a) In the event of the determination of insolvency and order ofliquidation of a licensedinsurer after the effective date of this act, the association shall:
(1) Be obligated to the extent of the covered claims existing prior tothe determination of insolvency and arising within 30days afterthe determination of insolvency, or before the policy expiration date ifless than 30 days after the determination, or beforethe insuredreplaces the policy or causes its cancellation, if such insured does so within30 days of the determination, but such obligation shall includeonly thatamount of each covered claim which does not exceedthe first $300,000 of any claim,except that theassociation shall pay the full amount of any covered claim arising out of aworkmen's compensation policy. In no event shall the association beobligated to the policyholder or claimant in an amount in excess of theface amount of the policy from which the claim arises.
(2) Be deemed the insurer to the extent of its obligation on the coveredclaims and to such extent shall have all rights, duties and obligations ofthe insolvent insurer as if the insurer had not become insolvent.
(3) Assess insurers amounts necessary to pay the obligations of theassociation under subsection (1) subsequent to an insolvency, the expensesof handling covered claims subsequent to an insolvency, and the cost ofexaminations under K.S.A. 40-2911, and amendments thereto, and otherexpenses authorized by this act. The assessments of each member insurer shallbe inthe proportion that the net direct written premiums of the member insurerfor the preceding calendar year bears to the net direct written premiums ofall member insurers for the preceding calendar year. Each member insurershall be notified of the assessment not later than 30days beforeit is due. No member insurer may be assessed in any year an amount greaterthan 2% of that member insurer's net directwritten premiumsfor the preceding calendar year. If the maximum assessment, together withthe other assets of the association, does not provide in any one year anamount sufficient to make all necessary payments, the funds available shallbe prorated and the unpaid portion shall be paid as soon thereafter asfunds become available. The association may exempt or defer, in whole or inpart, the assessment of any member insurer, if the assessment would causethe member insurer's financial statement to reflect amounts of capital orsurplus less than the minimum amounts required for a certificate ofauthority by any jurisdiction in which the member insurer is authorized totransact insurance, or if the commissioner advises the association thatsuch assessment would in such commissioner's opinion, be detrimental tothe solvency of amember insurer. Each member insurer may set off against any assessment,authorized payments made on covered claims and expenses incurred in thepayment of such claims by the member insurer.
(4) Investigate claims brought against the association and adjust,compromise, settle and pay covered claims to the extent of theassociation's obligation and deny all other claims and may reviewsettlements, releases and judgments to which the insolvent insurer or itsinsureds were parties to determine the extent to which such settlements,releases and judgments may be properly contested.
(5) Notify such persons as the commissioner directs under K.S.A. 40-2908(b)(1), and amendments thereto.
(6) Handle claims through its employees or through one or more insurersor other persons designated as servicing facilities. Designation of aservicing facility is subject to the approval of the commissioner, but suchdesignation may be declined by a member insurer.
(7) Reimburse each servicing facility for obligations of the associationpaid by the facility and for expenses incurred by the facility whilehandling claims on behalf of the association and shall pay the otherexpenses of the association authorized by this act.
(b) The association may:
(1) Employ or retain such persons as arenecessary to handle claims and perform other duties of the association.
(2) Borrow funds necessary to effect the purposes of this act inaccordance with the plan of operation.
(3) Sue or be sued.
(4) Negotiate and become a party to such contracts as are necessary tocarry out the purposes of this act.
(5) Perform such other acts as are necessary or proper to effectuate thepurposes of this act.
(6) Refund to the member insurers in proportion to the contribution ofeach member insurer to the association that amount by which the assets ofthe association exceed the liabilities, if, at the end of any calendaryear, the board of directors finds that the assets of the associationexceed the liabilities of the association as estimated by the board ofdirectors for the coming year.
(c) The association shall issue to each insurer paying an assessment underthis act a certificate of contribution, in a form prescribed by thecommissioner, for the amount so paid. All outstanding certificates shall be ofequal dignity and priority without reference to amounts or dates of issue. Acertificate of contribution may be shown by the insurer in its financialstatement as an asset in such form and for such amount, if any, and periodof time as the commissioner may approve.
(d) Notwithstanding any other provisions of this act:
(1) A covered claim shall not include a claim filed with the associationafter the earlier of:
(A) Eighteen months after the date of the order of liquidation; or
(B) the final date set by the court for the filing of claims against theliquidator or receiver of an insolvent insurer.
(2) A covered claim shall not include any claim filed with the association ora liquidator for protection afforded under the insured's policy forincurred-but-not-reported losses.
(3) Any obligation of the association to defend an insured on a covered claimshall cease upon the association's:
(A) Payment, by settlement or on a judgment, of anamount equal to the lesser of the association's covered claim obligation limitor the applicable policy limit; or
(B) tender of such amount.
History: L. 1970, ch. 185, § 6; L. 1976, ch. 220, § 2;L. 2005, ch. 92, § 2; Apr. 14.
Article 29.--KANSAS INSURANCE GUARANTY ASSOCIATION ACT
40-2906.Insolvency of insurer; duties of association; powers; certificateof contribution.(a) In the event of the determination of insolvency and order ofliquidation of a licensedinsurer after the effective date of this act, the association shall:
(1) Be obligated to the extent of the covered claims existing prior tothe determination of insolvency and arising within 30days afterthe determination of insolvency, or before the policy expiration date ifless than 30 days after the determination, or beforethe insuredreplaces the policy or causes its cancellation, if such insured does so within30 days of the determination, but such obligation shall includeonly thatamount of each covered claim which does not exceedthe first $300,000 of any claim,except that theassociation shall pay the full amount of any covered claim arising out of aworkmen's compensation policy. In no event shall the association beobligated to the policyholder or claimant in an amount in excess of theface amount of the policy from which the claim arises.
(2) Be deemed the insurer to the extent of its obligation on the coveredclaims and to such extent shall have all rights, duties and obligations ofthe insolvent insurer as if the insurer had not become insolvent.
(3) Assess insurers amounts necessary to pay the obligations of theassociation under subsection (1) subsequent to an insolvency, the expensesof handling covered claims subsequent to an insolvency, and the cost ofexaminations under K.S.A. 40-2911, and amendments thereto, and otherexpenses authorized by this act. The assessments of each member insurer shallbe inthe proportion that the net direct written premiums of the member insurerfor the preceding calendar year bears to the net direct written premiums ofall member insurers for the preceding calendar year. Each member insurershall be notified of the assessment not later than 30days beforeit is due. No member insurer may be assessed in any year an amount greaterthan 2% of that member insurer's net directwritten premiumsfor the preceding calendar year. If the maximum assessment, together withthe other assets of the association, does not provide in any one year anamount sufficient to make all necessary payments, the funds available shallbe prorated and the unpaid portion shall be paid as soon thereafter asfunds become available. The association may exempt or defer, in whole or inpart, the assessment of any member insurer, if the assessment would causethe member insurer's financial statement to reflect amounts of capital orsurplus less than the minimum amounts required for a certificate ofauthority by any jurisdiction in which the member insurer is authorized totransact insurance, or if the commissioner advises the association thatsuch assessment would in such commissioner's opinion, be detrimental tothe solvency of amember insurer. Each member insurer may set off against any assessment,authorized payments made on covered claims and expenses incurred in thepayment of such claims by the member insurer.
(4) Investigate claims brought against the association and adjust,compromise, settle and pay covered claims to the extent of theassociation's obligation and deny all other claims and may reviewsettlements, releases and judgments to which the insolvent insurer or itsinsureds were parties to determine the extent to which such settlements,releases and judgments may be properly contested.
(5) Notify such persons as the commissioner directs under K.S.A. 40-2908(b)(1), and amendments thereto.
(6) Handle claims through its employees or through one or more insurersor other persons designated as servicing facilities. Designation of aservicing facility is subject to the approval of the commissioner, but suchdesignation may be declined by a member insurer.
(7) Reimburse each servicing facility for obligations of the associationpaid by the facility and for expenses incurred by the facility whilehandling claims on behalf of the association and shall pay the otherexpenses of the association authorized by this act.
(b) The association may:
(1) Employ or retain such persons as arenecessary to handle claims and perform other duties of the association.
(2) Borrow funds necessary to effect the purposes of this act inaccordance with the plan of operation.
(3) Sue or be sued.
(4) Negotiate and become a party to such contracts as are necessary tocarry out the purposes of this act.
(5) Perform such other acts as are necessary or proper to effectuate thepurposes of this act.
(6) Refund to the member insurers in proportion to the contribution ofeach member insurer to the association that amount by which the assets ofthe association exceed the liabilities, if, at the end of any calendaryear, the board of directors finds that the assets of the associationexceed the liabilities of the association as estimated by the board ofdirectors for the coming year.
(c) The association shall issue to each insurer paying an assessment underthis act a certificate of contribution, in a form prescribed by thecommissioner, for the amount so paid. All outstanding certificates shall be ofequal dignity and priority without reference to amounts or dates of issue. Acertificate of contribution may be shown by the insurer in its financialstatement as an asset in such form and for such amount, if any, and periodof time as the commissioner may approve.
(d) Notwithstanding any other provisions of this act:
(1) A covered claim shall not include a claim filed with the associationafter the earlier of:
(A) Eighteen months after the date of the order of liquidation; or
(B) the final date set by the court for the filing of claims against theliquidator or receiver of an insolvent insurer.
(2) A covered claim shall not include any claim filed with the association ora liquidator for protection afforded under the insured's policy forincurred-but-not-reported losses.
(3) Any obligation of the association to defend an insured on a covered claimshall cease upon the association's:
(A) Payment, by settlement or on a judgment, of anamount equal to the lesser of the association's covered claim obligation limitor the applicable policy limit; or
(B) tender of such amount.
History: L. 1970, ch. 185, § 6; L. 1976, ch. 220, § 2;L. 2005, ch. 92, § 2; Apr. 14.
